The new Bank of Cyprus President, Christis Hassapis, has apologised to the country, shareholders and depositors over the previous lending practices of the bank and has vowed not to repeat past mistakes.

THE Bank of Cyprus new management said it feels ashamed over the bank’s past lending practices that brought Cyprus’ largest lender at the brink of collapse.

As part of the €10 billion bailout financial assistance programme for Cyprus, 47.5% of deposits over €100,000 in BoC have been converted to capital to plug a nearly €4 billion capital shortfall until 2015 on the basis of a due diligence exercise carried out by Pimco.

Furthermore, BoC absorbed the good part of Cyprus Popular Bank, the island’s second largest lender which will be wound down. The previous Board of Directors as well the Bank’s senior management, resigned under heavy criticism.

Amid soaring non-performing loans (NPLs), notably among large companies in the housing sector, the bank posted a €1.8 billion loss for the first six months of 2013, with NPLs reaching 36% of the bank’s gross loans.

“We are ashamed over the past mistakes and vow as the new Board to do our utmost not to repeat these mistakes ever again,” Christis Hassapis, the new BoC President said during an Annual General Meeting, noting “we apologise to the country, we apologise to our shareholders and we apologise to our depositors.”

Both Hassapis and the bank’s new CEO, Irish John Patrick Hourican vowed that the new board will work to regain the clients confidence and underlined the need to tackle the rising NPL’s, which is currently the bank’s major challenge.

They both made clear that the lending policy from here on will focus on the borrower’s capacity to repay its loan and not on the basis of collateral value, which was the main practice in the past.

“Lending policies and practises are being revised and the imprudent lending policy based on collateral value will be replaced with the prudent lending on the basis of the proven repayment capacity, pursuant to the supervising authority’s directives,” Hassapis noted.

On his part Hourican, who worked in Royal Bank of Scotland before assuming the top management seat in BoC, said the board will make small steps to regain the people’s confidence. “However, it will take time, as there is no quick fix to the bank’s problems,” he said.

According to Hassapis, the bank is currently implementing a restructuring plan, featuring a specialized management of the bank’s large exposure to land developers and a centralized handling of the NPLs in a bid to achieve their swift recovery or restructure as far as of viable corporations are concerned.

Hourican said following the bailout decisions, BoC became hostage to the Cypriot economy.

“A deeper and more prolonged contraction with its consequences on unemployment, real estate and client confidence could derail the implementation of the restructuring plan,” he said, noting “perhaps our biggest task at hand is regaining the confidence of our clients.”

However, he described the CBC’s new directive on NPLs as “foolish as it traps large amount of capital,” and he added the tendency of asset quality deterioration will continue beyond the first half of 2013.

Noting that the bank is working to contain this tendency, Hourican stressed that there is no problem with the bank’s capital.

According to the latest financial results, BoC capital adequacy ratio stands at 10.7% whereas the IMF believes that BoC’s Core Tier 1 capital ratio will remain at 9% throughout the programme period, that is, until 2016.

That’s OK, perhaps, for the future BoC practices and behaviour but I don’t see one iota of an apology, policy, plan or commitment to rectify BoC’s past and on-going iniquities vis-Ã -vis instructing liquidators to pursue innocent home buyers for the debts of the developers they bought from.

So long as that policy remains – and I recall one editor describing such behaviour as sociopathic – BoC can never claim to have rehabilitated itself or restore any kind of positive reputation.

Instead of meaningless apologies why don’t the banks go after the directors and others that have taken out large loans and seize their homes and personal assets, after all the banks have no problem in turning people out of there homes that have been bought and paid for but the loans by the developer were never paid. The banks never checked, that is called due diligence and if you do not do your job properly don’t assume that someone else will pay for your incompetence

The white colour criminals who ran the Cypriot banks into the ground have scarpered with their ill-gotten gains.

These ‘executives’ helped themselves to billions of euros. Vgenopoulos and his cronies who were in charge of Laiki took several billion and Aristodemou, one-time Chairman of Bank of Cyprus with links to Aristo Developers, helped himself to over â‚¬300 million. The Chairman of the Co-op Bank and his family took loans of â‚¬10.9 million. He’s still in post and has admitted that his loans have been non-performing for years. Beat that, if you will!

Mafia banks in a Mafia run country. Period.

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